Thursday, 13 February 2014

Apple monitor to stay in ebooks case, with boundaries

Apple will continue to be watched by an antitrust monitor during its appeal of a court order creating the position, a court ruled.

While a setback for Apple, which had asked for a stay of the appointment of an external compliance monitor in an ebooks price-fixing conspiracy case, the ruling by the appeals court on Monday also sets boundaries for the monitor.

In 2012, the Department of Justice along with 33 states and U.S. territories brought a lawsuit charging that Apple and five major U.S. book publishers conspired to raise prices in the ebook market in 2010.

Ruling last year that Apple and the publishers conspired to raise the prices of ebooks, the U.S. District Court for the Southern District of New York had ordered the appointment of the monitor to evaluate whether Apple’s compliance and training programs were designed to detect and prevent future violations of antitrust laws, according to court records.

The U.S. Court of Appeals for the Second Circuit observed that the government had explained at oral argument that the injunction from the District Court ensures that not only does Apple have an antitrust compliance program in place but that Apple’s employees, particularly senior executives and board members, are instructed on what those compliance policies mean and how they work.

“The government conceded that the injunction would not allow the monitor to investigate whether such personnel were in fact complying with the antitrust or other laws,” the court observed. It ordered that the monitor was empowered to demand only documents relevant to his authorized responsibility, and to interview Apple directors, officers, and employees only on subjects relevant to that responsibility

Apple has had a number of issues with the monitor Michael R. Bromwich, criticizing his fees as excessive, describing him as “adversarial, inquisitorial and prosecutorial,” in his approach to Apple, and objecting to his making direct contact with employees contrary to the court’s requirement that a counsel should be present at such meetings.

Bromwich, among other things, complained of lack of access to Apple staff and documents. In the two months since his appointment, seven of the eleven people his team was permitted to interview were lawyers rather than business people, he wrote in a filing in December.

“Apple’s true complaint is that it ‘does not control the monitorship,’ the government said in a recent filing to the appeals court. Even if Apple could establish that the monitor had exceeded his authority, the proper relief at best would be disqualification of the particular monitor, and not invalidation of the provision for a monitor, it added.

Apple could not be immediately reached for comment on the ruling by the appeals court.